🚴🏻 Another bike-sharing company died in Singapore

Hey Founders,

Welcome to The Runway Ventures, a weekly newsletter where I deep dive into startup mistakes and lessons learned to help you become a better founder.

When I shared about Friendster’s failed story last week, it brought back a lot of the good old memories (I was a big fan of Friendster back then!). If case you missed it, you can read it here!

🚴🏻 Today’s issue is about a bike-sharing company in Singapore. You might have heard of it or used it.

Let’s get to it! 🚀

☠️ 1 Failed Startup: SG Bike

🚀 The Rise of SG Bike

SG Bike, founded in August 2017, is Singapore’s homegrown bike-sharing company. It aims to provide an active and sustainable alternative while helping people move from one place to another easily.

• The Problem — Despite the convenience of public transport (train, bus) in Singapore, sometimes people struggle to move around the city when the distance is too far to walk and there is no public transport in between.

• The Solution — SG Bike provides a mobile app where people can rent bicycles by scanning the bicycles’ QR codes and riding around the city.

💟 Guess what? People loved it! It’s cheap, easy to use, mobile, and accessible to many places.

In 2019, SG Bike got the approval from Land Transport Authority (LTA) and successfully acquired Mobile’s license to operate a fleet of 25,000 bicycles, making SG Bike the largest bike-sharing company in Singapore.

From there, SG Bike continues expanding its fleet size and product offerings over the years.

📉 The Fall of SG Bike

Despite being the largest bike-sharing company in Singapore, SG Bike has been facing challenges over the years. On 21 March 2024, SG Bike announced that it will cease operations on 30 April 2024 as it had decided not to renew its operating license. But why?

🚴🏻 Here’s what happened to SG Bike:

With SG Bike’s closure, the Singaporean bike-sharing market will now be dominated by Anywheel (30,000 bikes and 1.3 million users) and HelloRide (backed by Alibaba, 10,000 bikes).

Will the bike-sharing market eventually consolidate and be dominated by only these 2 bike-sharing players? We’ll see.

But one thing is for sure — SG Bike has come to the end of its journey.

Want to learn more about SG Bike’s downfall?

• Singapore’s SG Bike to cease operations, move users to Anywheel

• Why is it so hard for bike-sharing companies to survive in Singapore?

• The rise and fall of Singapore's bike-sharing industry

⚠️ 2 Mistakes

Mistake 1: Lack of commercially viable business model

While the concept of bike sharing is good, having a clear path to profitability for bike-sharing companies is often very tough due to the business nature itself and high operating costs.

Based on SG Bike’s pricing, it runs on a ride pass subscription and standard pay-per-use with a fee of $0.03/minute for users. In order to grow its revenue, it needs to have more users and its usage among users needs to be sufficiently high and frequent.

If we assume the average daily usage hours is 30 minutes (based on the Singapore-MIT study), the daily revenue per bike is $1 and the monthly revenue per bike is $30.

After factoring in operating costs like manpower, tech, bike maintenance, repositioning of bikes, unfortunate theft and vandalism, it’s very hard to become profitable.

On top of that, when more bikes are deployed, supply becomes higher, and users have more options to choose which bikes to ride, causing the daily usage hours per bike to become lower than 30 minutes → lower revenue per bike.

Mistake 2: Highly regulated and competitive landscape

During the boom in 2017, bike-sharing companies launched thousands of bicycles across the city. While the popularity was high, many abuse cases, theft, vandalism and irresponsible use of bicycles were also reported.

Eventually, LTA stepped in to regulate the ecosystem to make sure bike-sharing companies comply with the regulations.

With a highly regulated and competitive landscape (location-based and price-sensitive), the market became increasingly tough for SG Bike to survive.

🧠 3 Lessons Learned

Lesson 1: Solve problems with a viable business model

At the end of the day, a business is just a hobby if the business can’t generate profits. Unless you have a deep pocket to keep burning and growing at all costs, it’s almost impossible to survive in a competitive market like bike sharing.

Lesson 2: Identify potential regulatory changes and manage risks

No one expected that LTA would step in and regulate the whole bike-sharing landscape in Singapore. This is also the reason why Ofo closed down in Singapore as they couldn’t comply with the regulations.

This shows that regulatory changes could be a strong headwind or tailwind to companies. By identifying potential regulatory changes beforehand, this could help prepare you to manage risks ahead.

Lesson 3: Healthy competition

Even though SG Bike and Anywheel are competitors to each other, the arrangement between SG Bike and Anywheel was made with the best interests of their users in mind to ensure the continuity and reliability of bike-sharing services and to ensure minimal disruption to its users in Singapore.

Kudos to SG Bike which did what’s best for its users.

That's all for today

Thanks for reading. I hope you enjoyed today's issue. More than that, I hope it has helped you in some ways and brought you some peace of mind.

You can always write to me by simply replying to this newsletter and we can chat.

See you again next week.

- Admond

Disclaimer: The Runway Ventures content is for informational purposes only. Unless otherwise stated, any opinions expressed above belong solely to the author.